SINGAPORE - The United States and China must find a new equilibrium for there to be peace and prosperity, but this may take some time, said Deputy Prime Minister Heng Swee Keat on Tuesday (Nov 30).

Both countries are competing within the same interconnected, interdependent system, and decoupling "will lead to mutually assured economic value destruction", he said.

"At best, neither can fulfil their maximum economic potential. There could be a regression in living standards, not only for the US and China, but also the rest of the world," he added. "At worst, economic decoupling is a slippery slope towards strategic miscalculation and a disastrous conflict."

In the meantime, countries can continue to foster growth and stability by working together to shape the course of global action, said Mr Heng.

He listed three things Singapore can do: Cooperate with like-minded countries as pathfinders to catalyse change; work with its neighbours to keep Asean open, inclusive and credible; and make globalisation work for its people and businesses.

Stressing that peace and prosperity are deeply intertwined, he said: "A globalised world is not just what Singapore needs to survive and thrive, it also reflects what we stand for as a society.

"As a multiracial, multi-religious and multicultural society, embracing diversity and growing what we share in common have become, and must always remain, our way of life," he said.

He added that Singapore has known since independence that it had to stay open, welcome talent from abroad and integrate those who choose to stay on.

Mr Heng was speaking at the 12th S. Rajaratnam Lecture, organised by the Ministry of Foreign Affairs (MFA), for distinguished public figures to speak on topics related to diplomacy and international relations.

This year's event was held in a hybrid format for the first time, with participants attending virtually and also at the National University of Singapore's University Cultural Centre.

Touching on US-China geopolitical rivalry, Mr Heng noted that while the blurring of lines between competitive domains such as the economy, technology, security and ideology have made it harder for both countries to find common ground for cooperation, it is not an impossible task.

He noted they have many areas of complementarity in economic development, and suggested they work together to lead the world in tackling shared challenges such as the climate, as they had at the recent United Nations climate conference, or COP26, in Glasgow.

He added that high-level exchanges, including the recent dialogue between China's President Xi Jinping and US President Joe Biden, are welcome signs that both countries want to manage competition responsibly and ensure that their relationship stays on a stable footing.

"The US and China should not let strategic mistrust overshadow opportunities for mutual progress," said Mr Heng.

"The US and China will compete where they must, but it is critical that there are safeguards in place to ensure that competition does not veer off course into conflict. Any clash between the world's two largest economies will only be to the detriment of themselves and the world."

Turning to the role Singapore can play in restoring global growth and stability, Mr Heng said it can work closely with like-minded countries to create new building blocks for meaningful change.

He cited how the Republic worked with New Zealand and then Brunei and Chile to start the Trans-Pacific Strategic Economic Partnership Agreement, or P4, which eventually evolved into the 11-member Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

Singapore, Chile and New Zealand have gone on to establish the Digital Economy Partnership Agreement, or Depa, to harmonise standards and enable trusted flows of data for digital trade.

China has recently indicated its wish to join the CPTPP and Depa, Mr Heng noted, saying this shows how a few determined small states can catalyse change.

He also cited how Singapore has mooted platforms such as the Forum of Small States and Global Governance Group to ensure the voices of smaller countries are heard. It also worked with Switzerland to co-chair the informal Friends of the Covax Facility to help the global effort to ensure equitable access to Covid-19 vaccines.

"No country will be able to recover from this crisis alone," he said. "The purpose is not to form an exclusive bloc to compete with other groups or powers, but to be pathfinders for global change."

A second role for Singapore is to work with its neighbours to keep Asean open, inclusive and outward-looking.

Mr Heng noted that China's economic success has been a boon for the region, and Asean and China are each other's biggest trading partners. China's Belt and Road Initiative is also an important effort for greater economic integration and mutual gains.

Mr Heng urged the US to boost its economic engagement in the region, noting that its security presence had brought stability and peace. For this to continue, the US cannot afford to be absent from the region's evolving economic architecture, he added.

It is also important for Asean to maintain its credibility, he added, saying its position on Myanmar shows the grouping can hold its own against external pressure.

"We have taken a principled position to forge consensus, and urge other countries to do likewise," he said.

Thirdly, Singapore must continue to improve the lives of its people and ensure the spoils of globalisation are equitably shared.

Mr Heng noted that support for globalisation has waned around the world because its benefits are not well distributed within and across economies, and the resulting domestic disgruntlement has hampered the ability of governments to strike the deals needed for reforms to the multilateral system.

For Singapore to continue improving its people's lives, the only way is to stay open and remain useful and relevant to the world. This means adapting the economy and helping workers gain the skills to compete, he said.

"We must continue to attract the best talent from around the world to complement our local workforce, and welcome those who share our conviction and values to settle here," he added.

"The more Singaporeans are with us on globalisation and the more united we are as a nation, the better we can chart our future with confidence, while contributing to the global commons, including in the fight against Covid-19."

Calling on MFA officers and diplomats here to continue to push the boundaries of cooperation, Mr Heng said: "Political, economic and technological disruptions have strained global stability in this age of complexity. Covid-19 has piled on the pressure. So, too, the intensifying strategic competition between the US and China.

"But in every crisis, there is opportunity. We must partner one another to ensure continued prosperity and growth."